Hidden Gems: 3 Stocks That Wall Street Is Missing Out On
The stock market has been on fire, with the Standards and Practices 500 now just 5% away from its all-time high. Who would have thought that was in the cards for the first seven months of 2023? Despite the rally, there are still a number of hidden gem stocks and overlooked stocks that investors can get their hands on this year.
That’s not to say that they’ll be the next Nvidia (NASDAQ:NVDA) or that the stock will go on a blistering rally in the short term.
However, the point is simpler than that. Despite the S&P 500 rising significantly in the past four-and-a-half months — up 20% from the March low — there are still many overlooked stocks that haven’t participated in the upside.
Let’s take a look at a few of these hidden gem stocks now.
Best Hidden Gem Stocks: Target (TGT)
While Target (NYSE:TGT) ruffled some of its customers’ feathers last month, that shouldn’t distract investors who are focused on the long term. That’s especially true if the United States is able to avoid a recession. If the country avoids a recession, then consumer spending will continue to hum along, while back to school shopping and the holidays will be additional catalysts.
The stock suffered a nasty 22% correction, as it fell for nine straight sessions in June. From the high, shares are down a little more than 50%. Here’s the thing though: Analysts still expect growth!
Revenue growth is nothing to write home about as consensus expectations call for sub-2% growth this year and next year. However, analysts expect about 36% earnings growth this year and almost 25% growth next year.
This leaves Target shares trading at just 16 times this year’s earnings, while the stock pays a 3.3% dividend yield. Oh yeah, and it has raised that dividend for 52 consecutive years.
Getting Walgreens (NASDAQ:WBA) stock does require a little faith; faith that the U.S. economy will avoid a recession, and faith that management will be able to turn around some of its woes.
To some extent, the first worry — a recession — is less intimidating. Whether there’s a recession or not, consumers will still pick up necessities and prescriptions. However, Walgreens needs to turn its ship around in order to spell high returns.
Forecasts call for mid-single-digit revenue growth this year and next year, but earnings estimates get a bit messy. While non-Generally Accepted Accounting Principles (GAAP) expectations sit at about $4 a share — leaving the stock trading at just seven times earnings — GAAP expectations call for a loss on the year.
On the plus side, those same GAAP estimates call for earnings of about $3 a share in fiscal 2024, while Walgreens is operating in its last fiscal quarter of 2023 already. Wwhile fiscal 2023 was a bad year for the firm, 2024 is looking brighter. If that’s the case, Walgreens deserves a spot on our list of hidden gem stocks.
That said, shares recently hit a multi-year low after its earnings disappointment in late June. Due to the dip, the dividend yield now sits at 6.4% and while the company has raised its payout for 47 straight year, it risks losing that streak if it doesn’t hike again in the next few quarters.
One stock that doesn’t get much love is Comcast (NASDAQ:CMCSA). Yet, the firm has a foothold in multiple markets.
Many know Comcast for cable and internet offerings — it’s the largest provider for both services in the U.S. — but it has built itself into an impressive conglomerate. Comcast also owns NBC Universal, which controls stations like NBC, E!, Bravo, CNBC and many others. It also owns DreamWorks Animations, Universal Parks & Resorts, Universal Pictures and Peacock, a streaming media platform.
Comcast also owns a one-third stake in Hulu, that it will likely sell to Disney (NYSE:DIS) in early 2024. Disney owns the other two thirds. Despite having a larger market capitalization than Disney, the latter seems to get much more recognition than the former.
Shares pay out a 2.7% dividend yield, and although CMCSA stock is cheap at 11.5 times this year’s earnings estimate, it has the type of growth that tends to go with cheap stocks.
Estimates call for a 1% revenue dip this year before rebound to 2.6% growth next year. As for earnings, estimates call for flat growth this year, before expanding to 12% growth in 2024. Unlike Walgreens, Comcast is only operating in its second fiscal quarter of fiscal 2023.
On the date of publication, Bret Kenwell held a long position in WBA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.